There are three states: A, B, C. (States are just like goto targets in C.) State B passes control to A and C, but states A and C don't "know about" each other; they only pass control back to B. This is a sort of modular construction, whereas in true spaghetti code each state would be able to pass to all the others.
This program has some other interesting features. It never prints a blank (that is, whenever it scans a 0, it prints 1, 2, or 3). Additionally, every instruction changes either the state or the color -- there are no "lazy instructions" like B1 -> 1LB that just move position without changing anything else.